CUC to review 2.1-cent kph infrastructure rate

The Commonwealth Utilities Corp. eyes a 2.1-cent charge for a planned “infrastructure improvement” rate that will be reviewed by CUC consultants and board during their meeting today.

CUC consultants from economists.com are set to present to the board today, according to a copy of the meeting’s agenda.

Speaking to the board during a meeting last week, consultant Dan Jackson said they would be presenting “alternative rate structures” in the wake of the board’s decision to withdraw a debt service surcharge with the Commonwealth Public Utilities Commission, the ongoing negotiations with the Commonwealth Development Authority to impose a moratorium on debt payments, and the recent release of fiscal year 2014 CUC financial statements.

The decision to withdraw the debt service surcharge petition, eyed at a 2.1-cent per kilowatt charge, was made by the board last month after discussions to improve CUC’s “line losses” and also CPUC’s rejection of this debt rate on “immediate relief” in May. As for the proposed moratorium, this was detailed in a letter to CDA last month, and the financial statements were shared with the board early last week.

“Given the changes that have occurred…We’d like to give the opportunity to present some alternatives for going forward,” Jackson told the board.

“I would say that the default position right now is that the infrastructure surcharge would be the same as what the debt service surcharge is [2.1 cent per kilowatt hour],” he said, adding that they would like the opportunity to “run the numbers” before the board.

Jackson said they would talk about the status of their current filings with CPUC are and potential benefits to an infrastructure surcharge.

He said the question is, “How do we replace the revenues that we sought to get from the debt service charge?”

Board chair Adelina Roberto said they are thinking about using the same rate as they had for a “PIMC” rate, which was at 2.1 cent per kilowatt-hour.

The planned debt service charge was to replace this charge without adding more to CUC’s monthly bills as the 2.1 cents had already been fixed. However, the rate expired at the end of April.

The CUC board is considering whether to implement the rate on an annual basis or revaluate it every 12 months. Jackson said last week they would be presenting on both alternatives.

The 2.1-cent charge would allow CUC to collect about $4.5 million a year.

The originally planned debt service charge was to pay off $4.32 million in deferred to CDA by October 2016. Right now, though, CUC aims for a moratorium on debt payment and interest.

As for the planned infrastructure rate, CUC has identified $10 million in needed distribution repairs and upgrades to improve efficiency and cut technical losses. These improvement include changing out transformers to match current loads, replacing old dilapidate poles, cross-arms, and other hardware to improve reliability during storms, for example.

Then-executive director Alan Fletcher told Saipan Tribune last month it would take “direct investment” to make these improvements and that a targeted surcharge would restrict these funds to these specific projects.